News

Latin American McDonald's experienced traffic decline from World Cup

August 5, 2014

McDonald's Latin American (and largest) franchisee, Arcos Dorados Holdings, reported its Q2 results this week, which included a systemwide comp sales increase of 7.8 percent.

Consolidated revenues, however, were $917.9 million, a 7.2-percent decline versus the second quarter of 2013. Also, the company reported a net loss of $99.0 million, compared to net income of $8.8 million in the year-ago period, mainly due to the impact of the transition to the SICAD II foreign exchange rate in Venezuela.

"Second quarter results were impacted by weak economic growth in several of our key markets. In Brazil, our largest market, consumer trends have continued to be soft since the beginning of the year and in the second quarter we experienced a greater than anticipated decline in traffic as a result of the FIFA World Cup. Given this backdrop, I am pleased to announce that we have achieved another quarter of double-digit organic revenue growth, supported by a high single-digit increase in comparable sales," CEO Woods Staton said in a news release.

The decline in traffic during the World Cup, hosted by Brazil, came despite the brand's barrage of marketing efforts surrounding the event.

Staton said expectations for economic and consumption growth have "deteriorated substantially" compared to the original outlooks for this year.

"In response to the effect of the deteriorating macroeconomic conditions on our first half results, recent developments in one of our major markets and the short-term impact of the FIFA World Cup, we are revising our full year guidance. In this environment we will be balancing our focus on maintaining traffic in our restaurants with our long-term plans to realize operational cost savings, become more efficient and improve profitability," he said.